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Module I.docx

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University of Ottawa

Module IProf Kuziemsky Module IUnit 1 Introduction to the Digital FirmThe World is FlatSupply Chaining method of collaborating horizontally among suppliers retailers customers to create value enabled by the flattening of the world and a great flattener itselfWalMart is the biggest retail company in the world and it does not make a single thing except for a hyper efficient supply chainTwo basic challenges in developing a global supply chain in a flat worldoGlobal optimizationtotal cost of delivery from all parts of globelowestoCoordinating distribution prone supply with hard to predict demandTo avoid this replace inventory with informationAdvanced infotech also gives visibilitywhere products are at any time as they move throughZara Spanish fashion retailer is good at redirecting flows to where the demand is highest motto more profitable to incur shortages than overstock then respond to shortages with lightning speed so you are offering customers exactly what they want with much less risk of leftoversPostponement strategy as it becomes harder to forecast demand good companies find ways to postpone adding value to their products until the last possible momentLike Dellno inventory makes exactly the number of computers customers wantIn a flat world products turned from innovations to commodities faster than ever competition is more intense than ever fads like lightning boltsso smart fast global supply chain is crucialWalMart controversyoSupply chains good deliver all sorts of goods at lower prices and just how we want themoSupply chains bad force companies to cut costs wages benefits pressure to competeThe coefficient of flatness the fewer natural resources your company or country has the more you will dig inside yourself for innovations in order to surviveWalMarts edge buy goods in volume directly from manufacturers oHas own distribution center where merchandise is shippedoHas own trucks to distribute the goods to its storesWalMarts basic method get deep discounts by buying directly from manufacturers then focused on three thingsoWorking with manufacturers to cut costs as much as possibleoWorking on its supply chain from those manufacturers to make lowcost frictionlessoConstantly improving its information systemsWalMarts culture is lowcostborn out of necessityoSharing informationmore efficient all aroundo1982 point in sale terminals then satellite system linking all stores to company headquartersopening databasesoRFIDradio frequency identification microchipsreplace barcodes RFID technology and sophisticated order analysis tools that monitor even the most minute market activity are rapidly leading us toward industrys holy grailabsolute balance in supply and demandToo much of a good thingconstant innovation etc bred not just a ruthless quest for efficiency but a degree of ruthlessness periodWalMart is the China of companies has so much leverage that it can grind down any supplier to the last halfpenny not hesitant about using its ability to play its foreign and domestic suppliers off against one anotherWalmart sells quality products at low pricesUPSinsourcingnot just delivering packages theyre doing logisticssynchronizing global supply chains for companies large and smallhas become a dynamic supply chain manageroIe fixing Toshiba computers delivering Papa John pizza HP printers etc
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